Role of business in society: Social Responsibility of Business

CSR! Is that really for me? So technical, very expensive!! Definition Corporate Social Responsibility Definition What is Corporate Social Responsibility? CSR! Is that really for me? So technical, very expensive!! I’m overwhelmed

Definition What is Corporate Social Responsibility? ‘Corporate Social Responsibility is the continuing commitment by business to behave ethically and contribute to economic development while improving the quality of life of the workforce and their families as well as of the local community and society at large’. – World Business Council For Sustainable Development

Definition Corporate Social Responsibility Definition Analysis of the definition by the World Business Council For Sustainable Development Expectation of stakeholders that companies should behave ethically Expectation that business should contribute to economic development Expectation that business should improve the quality of life of its workforce and their families Expectation that business should play active part in the improvement of the society

Definition What is Corporate Social Responsibility? The responsibility of business towards the society https://www.youtube.com/watch?v=kQgzcuKS5ys

Definition Corporate Social Responsibility Definition Our Definition A voluntary initiative on the part of a business to contribute to a better society and a greener and cleaner environment.

Social Responsibilities of Business Social responsibility is the company’s mission to be responsive to social needs by earmarking a part of its resources so that they may be allocated for achieving social goals and tackling social problems. There are many situation where social responsibility of business becomes necessary like to create good corporate image, social commitment, because of legal provision etc.

Need for social responsibility To create good corporate image. To comply with legal provisions. Nature calamities etc. To improve product positioning.

Manner in which a business carries out its own business activity the nature of Social Responsibility of business could be classifies into 2 categories Manner in which a business carries out its own business activity The welfare activity that it takes upon itself as an additional function. Welfare education activities

Social responsibility of business Shareholders Local Community Employees Social responsibility of business Consumers Govt. Global Env.

Social responsibility of Business towards different groups I) Responsibility towards the consumers. Provide quality product at fair price. Produce using proper quality materials. Produce using appropriate technology. Provide proper service. Commitment to customer satisfaction. R & D for better & new products Steps to remove imperfection in distribution system (check middle man) Ensure product has no adverse effect. Provide sufficient information, risks & care to be taken. Avoid misleading by improper advertisements. Redress genuine grievances. A happy customer is a loyal customer

II) Social Responsibility to shareholders Safeguard the capital of shareholders. Provide a reasonable dividend. Transparency and access to required information.

To solve problem of unemployment To develop infrastructure of country III) Social Responsibility to community To solve problem of unemployment To develop infrastructure of country To help in natural calamities Taking appropriate steps to prevent environmental pollution & to preserve the ecological balance Rehabilitating the population displaced by the operation of the business. Taking steps to conserve scare resources & developing alternatives where ever possible Improving efficiency of business operations Contributing to R &D Development to backward areas

IV) Responsibility to Human Resources Fair wages to employees Provide good career prospects Care for the welfare for employees Best working conditions Establishment of fair work standards & norms Arrangements for proper training & education and development Proper system of promotion Recognition, appreciation & encouragement of special skills& capabilities Efficient grievance handling system Participation in management decision

VI) Responsibility to Government To pay taxes, duties in time To cooperate with government in their social policies and programmes To obey all laws and acts VII) Social Responsibility to Global Business environment To adhere to the conditions of such a global environment To satisfy global customer needs

Corporate Social Responsibility (CSR) Carroll’s Four Part Definition Understanding the Four Components Responsibility Societal Expectation Examples Economic Required Be profitable. Maximize sales, minimize costs, etc. Legal Obey laws and regulations. Ethical Expected Do what is right, fair and just. Discretionary (Philanthropic) Desired/ Be a good corporate citizen. Business and Society: Ethics and Stakeholder Management, 5E • Carroll & Buchholtz Copyright ©2003 by South-Western, a division of Thomson Learning.  All rights reserved 2-16

Pyramid of CSR Philanthropic Responsibilities Be a good corporate citizen. Ethical Responsibilities Be ethical. Legal Responsibilities Obey the law. Economic Responsibilities Be profitable. Source: Archie B. Carroll, “The Pyramid of Corporate Social Responsibility: Toward the Moral Management of Organizational Stakeholders,” Business Horizons (July-August 1981). © 1991 by the Foundation for the School of Business at Indiana University. Used with permission.

Easy, no? What could be some barriers to CSR?

Barriers to social responsibility Urge for profiteering Desire for excessive accumulation of wealth Low profitability Frequently changing government mechanism Need for tackling other important internal issues . Recession and depression

Infrastructure Development EXAMPLE OF CSR Possible social service activities undertaken by a petroleum company Infrastructure Development Provision of Tube Wells etc for drinking water and irrigation Construction of multipurpose community centres Support for primary education Health Care Sanitation Provision for alternate sources of Energy e.g. solar energy

Education Support Health Care Provision for uniforms and teaching material. Food supplements Educational Scholarships to economically backward children. Health Care Regular health checkup for villagers Provision of free medicines for minor ailments Guidance on family welfare and general health care Free dispensaries.

Skill Enhancement Modern farming practices Distribution of fruit saplings Veterinary camps Distribution of smokeless chulhas. Organizing regular lectures for women on family life and education

Maintaining a happy workforce influence in the industry Benefits of CSR Corporate Social Responsibility Legislative Framework Winning new businesses Benefits Increase in customer retention Enhanced Relationship with stakeholders Saving money on energy and operating cost Benefits of CSR Attracting, Retaining and Maintaining a happy workforce Differentiating yourself from the competitor Media interest and good reputation Enhancing your influence in the industry Benefits Access to funding opportunities

Practical Application of CSR Corporate Social Responsibility Guidelines You need to evaluate various aspects of your business and operations You need to evaluate the impact your business is having on your stakeholders. Then set realistic targets on how to improve your business operations and processes. Draw up a result- driven CSR Policy. Embed your CSR into your business strategy.

Practical Application of CSR Corporate Social Responsibility Guidelines Appoint a driver for your CSR initiative Communicate your CSR efforts to all your stakeholders clearly and boldly. Make your CSR initiative part of your business culture Set up CSR measuring indicators to monitor progress and possible deviations. Be enthusiastic about your CSR initiative; be committed to it. Report on your initiatives and measure progress/ impact made.

Business And Society: Risk And Opportunities Opportunity Base of the Pyramid, Micro-Finance, Eco-Effectiveness CSR Partnerships Cheap Labor/Sourcing, Obesity/Consumerism, Environmental Damage, Bribery Nationalization Access to Medicine Access to Credit Piracy Climate Change Digital Divide, Youth Unemployment, Corruption BUSINESSS Risk Opportunity Source: Beyond Good Company

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Related to, but NOT THE SAME AS….

Business Ethics

What is meant by ethics? An ethic is a moral principle or set of moral values held by an individual or a group. Ethical behaviour is behaviour which is considered to be right and moral. Business ethics are the values and principles which operate in the world of business. They form the moral framework of the organisation.

Business ethics help firms decide what actions are right or wrong in certain circumstances. E.g. Should a firm relocate to a country paying lower level of wages? Should a firm release a life-saving drug after limited testing? Should advertising aimed at children be restrained?

What ethical issues are faced by business? Should firms use child labour? Is animal testing needed in products and ingredients? What wages should firms pay to poor countries? To what extent should firms seek to be environmentally friendly? Should firms get involved in certain activities? e.g making weapons

Why be ethical? Create good image and good press To act within the law Because the owners want to be It is one of their unique selling points To attract customers/employees/investors To be socially responsible

Two sides to every story Companies often find it difficult to please all of its stakeholders, as they have different interests. Being ethical depends on an individual view of what is right and wrong. What might be considered good behaviour to one individual, may seem bad to another. Ultimately companies aim to make a profit and sometimes this can conflict with acting in a responsible way. Larger, global companies can often find it difficult to regulate their activities in other countries.